America's Biggest Creditors are Dumping US Treasuries
Samuel Gee, News Editor
13 Feb 2017, 12:43 p.m.
America’s biggest foreign creditors have begun to dump American debt in response to Donald Trump’s presidency and economic policies.
Once known as the world’s safest debt market, it seems as though bigger deficits, increased inflation and interest rate hikes are making US debt much less attractive to foreign investors.
Japan and several other major holders of US Treasuries are withdrawing from the $13.9 trillion market at an alarming rate. China’s holdings now stand at a seven-year low having started selling US Treasuries in May, while Japan dumped $21.3 billion in December.
Domestic demand for US Treasuries is currently high enough to support the market despite the shrinking foreign investment. However should this trend continue, the long term impact could be problematic. The loss of relatively cheap funding through the sale of bonds to will hamper Trump’s progress in following an economic policy largely revolving around increased infrastructure spending.